A key question in foundation design is whether to place insulation on the inside or outside surface of the basement wall (Figure 2-5). In terms of energy use, there is not a significant difference between the same amount of full wall insulation applied to the exterior versus the interior of a concrete or masonry wall. However, the installation costs, ease of application, appearance, and various technical concerns can be quite different. Individual design considerations as well as local costs and practices determine the best approach for each project.

Rigid insulation placed on the exterior surface of a concrete or masonry basement wall has some advantages over interior placement in that it (1) can provide continuous insulation with no thermal bridges, (2) protects and maintains the waterproofing and structural wall at moderate temperatures, (3) minimizes moisture condensation problems, and (4) does not reduce interior basement floor area (Figure 2-6). If the exterior insulation extends up to cover the rim, and its R-value is high enough, the joists and sill plates can be left open to inspection from the interior for termites and decay. On the other hand, exterior insulation on the wall can provide a path for termites if not treated adequately and can prevent inspection of the wall from the exterior. Insulation that is exposed above grade must be protected with a coating to prevent physical damage and degradation. Such coatings include fiber cement board, parging (stucco type material), treated plywood, or membrane material (Baechler et al. 2005). Exterior insulation places the foundation wall within the thermal envelope. This means the wall will be warmer in winter, and moisture is free to dry to the interior. Because of this, impermeable materials like oil paint, polyethylene, or vinyl wallpaper should not be used as interior finishes.

Figure 2-6. Basement with Exterior XPS or EPS insulation

Exterior wall insulation must be approved for below-grade use. Typically, three products are used below grade: extruded polystyrene, expanded polystyrene, and rigid mineral fiber panels. (Baechler et al. 2005). Extruded polystyrene (nominal R-5 per inch) is a common choice. Expanded polystyrene (nominal R-4 per inch) is less expensive, but it has a lower insulating value. Below-grade foams can be at risk for moisture accumulation under certain conditions. Experimental data indicate that this moisture accumulation may reduce the effective R-value as much as 35%-44%. Research conducted at Oak Ridge National Laboratories studied the moisture content and thermal resistance of foam insulation exposed below grade for fifteen years; moisture may continue to accumulate and degrade thermal performance beyond the fifteen-year time frame of the study. This potential reduction should be accounted for when selecting the amount and type of insulation to be used (Kehrer, et al., 2012, Crandell 2010).

Rigid fiberglass and rigid mineral wool panels (R-4 per inch) do not insulate as well as extruded polystyrene, but are the only insulations that can provide a drainage space for foundation walls because of their porous structure. Use of these materials as a drainage space only works if effective footing perimeter drains are present.

Unfortunately, insulating the exterior is more difficult and more costly than insulating the foundation internally; this is particularly true in retrofit applications. For this reason, interior insulation is most commonly used. However, actual costs may be higher if a finished, durable surface is desired. In addition, foam insulation materials will require a flame-resistant layer for code compliance. Energy savings may be reduced with some systems and details due to thermal bridges. Insulation can be placed on the inside of the rim joist but with greater risk of condensation problems and less access to wood joists and sills for termite inspection from the interior. Interior insulation systems are not recommended for concrete masonry foundations without fully filled cores, due to an increased risk of moisture accumulation within the wall. Interior insulation systems are also not recommended in basements that have a risk of moisture intrusion, whether due to inadequate drainage, poor soils, high water tables, or other factors, due to a reduced ability for these systems to dry to the interior. Interior insulation should not be used if a positive capillary break is not present between the top of the foundation wall and wood framing system due to the potential for moisture accumulation in wood framing materials.

When interior insulation is to be used, it must meet the following requirements (Baechler et al. 2005):

Interior insulation should not be applied to concrete masonry walls below grade, unless the cores of the block are completely filled.

The application of interior insulation over walls where moisture is present is likely to increase the moisture content of the wall, due to its being colder, and to the limiting of drying potential to the interior.

The basement wall must maintain some drying capacity to the interior if wetting occurs since the below-grade portion of the wall cannot dry to the exterior. This means that interior vapor retarders or any impermeable interior wall finishes such as vinyl wall coverings or oil/alkyd/epoxy paint systems should not be installed.

The wall system must be tightly sealed to keep interior moisture-containing basement air from reaching the cool foundation wall via air-transport and condensing.

Material in contact with the foundation wall and the concrete slab must be moisture tolerant. Capillary breaks must be used to prevent moisture from reaching moisture sensitive materials.

There are two good approaches to interior basement insulation: rigid foam panels, and spray foam. Rigid foam systems consist of either expanded or extruded polystyrene foam board applied to the entire foundation wall, as shown in Figure 2-7 (BSC 2002). Spray foam applications typically involve spraying the entire foundation wall and typically the rim joist to an appropriate thickness. Additional unfaced batt insulation can be added to a frame wall built on the interior of the foam insulation, if desired. Foam plastic insulation materials are flammable, and must be protected from ignition. If no additional insulation is desired, wood furring strips can be attached over the foam and gypsum board may be attached to the furring strips. In all below-grade construction, non-paper faced gypsum board is recommended to reduce the risk of moisture-related damage. The gypsum board should be held at least a half inch above the basement floor to avoid wetting (Baechler et al. 2005). No vapor retarders, such as polyethylene, vinyl wallpaper, or oil-based paint should be used anywhere in the system to ensure drying to the interior.

It is possible to eliminate the use of gypsum board as an ignition barrier. This has been done by using foil-faced polyisocyanurate insulation panels, some of which are rated for exposure in basements and crawl spaces in some jurisdictions. Note however that the unperforated foil facing is completely vapor-impermeable, and very little drying will occur through it. Many jurisdictions will also allow high-density polyurethane foam to coat the rim and sill area (but not the entire wall) with no additional fire protection.

Interior insulation retrofits carry additional risks: capillary breaks may not be present between the foundation and the framing; insulating on the interior will tend to increase moisture accumulation in the framing. A capillary break may not be present between the footing and the wall, potentially increasing the presence of moisture due to capillary wicking. Since waterproofing and drainage systems are often not present or not working on older houses, bulk water penetration is possible. For description of a robust retrofit interior insulation strategy see Ueno (2011).

In addition to more conventional interior or exterior placement covered in this handbook, there are several systems that incorporate insulation into the construction of the concrete or masonry walls. These include (1) rigid foam plastic insulation cast within a concrete wall (Figure 2-5c), (2) polystyrene beads, granular insulation materials, or spray foam poured into the cavities of conventional masonry walls, (3) systems of concrete blocks with insulating foam inserts, (4) formed, interlocking rigid foam units that serve as a permanent, insulating form for cast-in-place concrete (insulated concrete forms, or ICFs, Figure 2-5d), and (5) masonry blocks made with polystyrene beads instead of aggregate in the concrete mixture, resulting in significantly higher R-values. However, the effectiveness of systems that insulate only a portion of the wall area should be evaluated closely because thermal bridges around the insulation can impact the total performance significantly.

Lastly, another technique for basement construction in new construction is to use pre-cast concrete foundation walls. Two types are acceptable. The first are concrete walls with built in footers that rest on an engineered gravel footing that allows the entire assembly to be drained. This means that as long as the panels are sealed correctly during construction, these walls will remain warm and dry. These walls are designed to be insulated on the exterior. The second are pre-cast concrete walls that come with one inch of rigid foam insulation attached to the interior. These walls are constructed to allow additional insulation to be installed between the stud bays and come with built in wood nailers to attach gypsum board or paneling (BSC 2002).